Correlation Between IBEX 35 and Pharma Mar
Can any of the company-specific risk be diversified away by investing in both IBEX 35 and Pharma Mar at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IBEX 35 and Pharma Mar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBEX 35 Index and Pharma Mar SA, you can compare the effects of market volatilities on IBEX 35 and Pharma Mar and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IBEX 35 with a short position of Pharma Mar. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBEX 35 and Pharma Mar.
Diversification Opportunities for IBEX 35 and Pharma Mar
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IBEX and Pharma is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding IBEX 35 Index and Pharma Mar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharma Mar SA and IBEX 35 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IBEX 35 Index are associated (or correlated) with Pharma Mar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharma Mar SA has no effect on the direction of IBEX 35 i.e., IBEX 35 and Pharma Mar go up and down completely randomly.
Pair Corralation between IBEX 35 and Pharma Mar
Assuming the 90 days trading horizon IBEX 35 Index is expected to under-perform the Pharma Mar. But the index apears to be less risky and, when comparing its historical volatility, IBEX 35 Index is 2.12 times less risky than Pharma Mar. The index trades about -0.01 of its potential returns per unit of risk. The Pharma Mar SA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 7,055 in Pharma Mar SA on September 1, 2024 and sell it today you would earn a total of 755.00 from holding Pharma Mar SA or generate 10.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
IBEX 35 Index vs. Pharma Mar SA
Performance |
| Timeline |
IBEX 35 and Pharma Mar Volatility Contrast
Predicted Return Density |
| Returns |
IBEX 35 Index
Pair trading matchups for IBEX 35
Pharma Mar SA
Pair trading matchups for Pharma Mar
Pair Trading with IBEX 35 and Pharma Mar
The main advantage of trading using opposite IBEX 35 and Pharma Mar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBEX 35 position performs unexpectedly, Pharma Mar can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pharma Mar will offset losses from the drop in Pharma Mar's long position.| IBEX 35 vs. All Iron Re | IBEX 35 vs. Tier1 Technology SA | IBEX 35 vs. Cellnex Telecom SA | IBEX 35 vs. Ebro Foods |
| Pharma Mar vs. Solaria Energa y | Pharma Mar vs. Grifols SA | Pharma Mar vs. International Consolidated Airlines | Pharma Mar vs. Cellnex Telecom SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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